It all comes down to the mission

The goal of performance-based IT services contracting is, ultimately, to improve the bottom line. And for government agencies, the bottom line is mission.

'We don't write contracts for contracts' sake,' said Deidre Lee, the Defense Department's director of procurement and acquisition policy. 'We do it to support the mission.'

'It's so important because the basic premise behind it is fundamental,' said Lee, who is temporarily on leave from her post to guide the Bush administration's acquisition strategy in the Iraq reconstruction effort. 'What do you want to accomplish? What is the result? We should be doing that with every single thing we do and every penny we spend.'

This isn't the only acquisition approach available to agencies. Neither is it always the best option. But for many IT services, officials say, it has the most potential.

Performance-based contracting's bloodlines descend through a corpus of directives, mandates and legislation, including Government Performance and Results Act of 1993 and the Clinger-Cohen Act of 1996. It also is manifest in the President's Management Agenda, which stresses performance and results across five intertwined areas of government activity.

Part of a broader trend

'Moving toward performance-based acquisition is part and parcel of a move toward performance-based government,' said Steve Kelman, professor of government at Harvard's John F. Kennedy School of Government and administrator of the Office of Federal Procurement Policy in the Office of Management and Budget from 1993 to 1997.

If performance-based acquisition is so important, why isn't everybody doing it?

For one thing, it requires a shift in the way procurement officials think and write about services contracts: You don't tell vendors how to do it; you let them tell you how it's done.

'It is not a great leap but it is a matter of greater sophistication,' said Ed Meagher, acting CIO at the Veterans Affairs Department.

Doing performance-based acquisition also requires commitment from the agency's key mission folks'the program managers. If they aren't on board, you can forget it.

'The contracting people can't do it by themselves,' Kelman said. 'They don't know the mission goals well enough.'

It isn't clear how much progress agencies are making on performance-based contracting.
In a GCN Management e-mail survey of Defense and civilian agency procurement officers, 79 percent reported that their agencies were using performance-based acquisition techniques for some contracts.

But last year the General Accounting Office said the amount of contracting dollars being spent through performance-based contracts in 2001 was about 21 percent.

That would seem to make goals such as the Defense Department's self-imposed mandate to make 50 percent of its services contracting dollars performance-based by 2005 a tall order. However, DOD has a good start'it surpassed its fiscal 2002 goal of making 20 percent of contracts performance based, said deputy director of Defense procurement Dominic Cipicchio.

OMB is pondering a 50-percent similar mandate for civilian agencies. But the real point is for agencies to get this right and not lose sleep over goals, OMB says.

Government entities that have plunged into performance-based contracting are leaving a long list of lessons learned.

The city of Chicago, for example, has successfully shifted a contract for IT infrastructure services with Unisys Corp. from detailed measurements of vendor performance to a single desired outcome that better connects to the city's mission achievement.

To underscore the point, some procurement insiders even suggest dropping the word contracting from the phrase and call it performance-based mission support.

'Isn't that what this is really about?' Lee said.

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